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The Market in Perspective

NEW YORK (Reuters) - Wall Street stocks climbed on Friday, with the S&P 500 index on track for its best gain in six sessions on the heels of a strong U.S. payrolls report, led by gains in technology stocks.

(Reuters) - Elliott Management Corp, the largest creditor of the bankrupt parent of Texas power transmission company Oncor Electric Delivery Co, is exploring putting together a bid for the company that would challenge Warren Buffett's $9 billion all-cash deal, people familiar with the matter said on Friday.

(Reuters) - Warren Buffett's Berkshire Hathaway Inc said on Friday it agreed to pay $9 billion to buy the parent of Texas power transmission company Oncor Electric Delivery Co, stepping up its pursuit of steady profits from utilities and infrastructure deals.

WASHINGTON (Reuters) - U.S. banks face a variety of risks, and many of those may lay beyond their control, according to a review released by banking's top federal regulator on Friday that found the sector's financial performance remains strong.

(Reuters) - Amazon.com Inc told Whole Foods Market Inc it would not engage in a sale process for the U.S. grocer that involved other bidders, a regulatory filing showed on Friday, shedding new light on the $13.7 billion acquisition.

(Reuters) - Apple Inc on Friday disputed the timeline of events leading up the disclosure by Imagination Technologies Group Plc that Apple plans to drop the graphics chip supplier, a loss of the UK company's largest customer that sent shares plummeting.

(Reuters) - Tesla Inc said current-quarter deliveries would include about 3,500 vehicles that were in transit to customers at the end of the second quarter, on a day the electric-car maker's first Model 3 rolls off the assembly line.

NEW YORK (Reuters) - Technology shares surrendered their leadership in the U.S. stock market over the past month, but the fast-growing group may soon resume its outperformance and maneuver back into pole position.

WASHINGTON (Reuters) - U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.

After the 2013 "reflation" selloff, it took just about two years for the treasury market to revisit (10s) the 2013 lows (rates).

In all that time, each and every bond selloff was met by the same assurances that "rates had nowhere to go but up" when instead the underlying fundamentals (economy as well as money/liquidity) were the same throughout.

"Rate hikes" and even balance sheet normalization are supposed to matter this time.

But QE taper and then its final end was believed highly relevant, too.

Maybe instead it doesn't matter what the Fed does. Sure didn't in 2008, so why would it in 2014, 2017, or any time hereafter?

On June 19, just around the time it emerged that Israel had been secretly funding Syrian rebel groups and was explicitly aligned with Saudi Arabia in the Syrian conflict, Saudi media reported that the kingdom had captured three members of Iran's Revolutionary Guard Corps from a boat as it approached the kingdom's offshore Marjan oilfield. The Saudi Center for International Communications added that the boat carried explosives, and the Iranians aboard "intended to carry out terrorist act in Saudi territorial waters" with the Marjan Saudi offshore oilfield allegedly targeted. In other words, Saudi paraded that it had caught what appeared to be three Iranian terrorists belonging to IRGC, suggesting this was an operation ordered from the very top.

Of course, Iran's take on things was different: Iran's Tasnim news agency said that Saudi border guards had opened fire on an Iranian fishing boat in the Gulf on Friday, killing a fisherman. It said the boat was one of two Iranian boats fishing in the Gulf that had been pushed off course by waves. So on one side terrorists, on the other fishermen: about par.

Three weeks later, there has been no resolution to this alleged hostage crisis, however in a new development, on Friday Iran's Fars news agency reported that Iran has returned the favor.

According to the Iranian news agency, Iran's Revolutionary Guards - this time on the offensive - intercepted a Saudis boat for violating Iran's territorial waters, and arrested the four passengers on board.

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

When the Dow breached the historic 20,000 mark, it was as if we had entered a brave new world without bears, business cycles, or traditional red flags. With the Dow at over 21,000 today, this raises the question: are we in a bubble?

Wall Street's new paradigm reminds me of a similarly Panglossian time: the late 1920s, when Yale Professor Irving Fisher, perhaps the greatest economist of his era, confidently proclaimed that stock prices were at a "permanently high plateau." Fisher, then 62 and a man of strong convictions, staked his reputation and fortune on an unwavering optimism about the economy and stock prices. Alas, the 1929 crash vaporized Fisher's $10 million fortune and cast a cloud over his reputation.

Thinking about both the 1929 and the current market, I went to my files to retrieve some correspondence I received in August 1996 from another great economist - a late Nobelist no less. Asking to remain anonymous (I'll call him "Dr. X"), he enclosed for my amusement what he called a "bubble detector."

After giving Dr. X's bubble detector some serious attention, I was far from amused. Since 1987, the readings on the bubble detector zig and zag, with an occasional "high" reading, signaling a potential bubble. As seen in the chart below, previous high points correspond with subsequent dips in the stock market and major recessions that occurred during that time period.

After a strong start to the year, European stocks have come off the boil. In particular, the bond-market turmoil of the past two weeks has jolted the market. But a decent growth outlook means investors shouldn't be too nervous about Europe.

The thinking that higher interest rates eventually hurt stocks is common on Wall Street. But in the current environment, it will instead be a dramatic change in equities that will impacts rates, according to some analysts.

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